The Apprenticeship Levy And Its Impact On SMEs

The Apprenticeship Levy And Its Impact On SMEs

Small to medium-sized enterprises or businesses (SMEs) surmount to around 5.4 million of UK businesses. This means that they make up the vast majority of businesses in Britain, and in doing so they play a vital role in the British economy.

Whilst owners of SMEs throughout the length and breadth of the country are no doubt toying over whether they will be voting in or out in the UK’s upcoming referendum on its membership to the European Union, the Apprenticeship Levy is perhaps some more welcome food for thought in the build-up to the 2017-2018 financial year.

It was widely reported in 2015 that Prime Minister David Cameron declared:

“The greatest asset any employer has is their workforce. And by investing in them, they are investing in the success and future of their business.”

The increased taxation to fund an apprenticeship kitty will open the door to many smaller businesses to gain access to government funding and integrate apprenticeship schemes within their business models. Many SMEs will have championed apprenticeship schemes for several years, but to a large number of UK companies it will be a new and somewhat unnerving venture.

The opportunity for SMEs to train apprentices in their workplace can bring with it huge benefits, and the rewards are plain to see. It gives the business or organisation a chance to develop younger workers to meet the ethos and the mission statement of the company. The financial rewards are potentially huge, but the benefits of taking on a young, keen workforce working towards a work-place qualification are priceless.

All employers are eligible for an allowance of £15,000 having the opportunity to offset this against their levy payments. This in turn means that Larger SMEs who fall into the £3 Million + annual payroll bracket will also feel the impact of the Apprenticeship Levy. The increased taxation means that these companies will be putting an action plan into practice in order to cope with or combat the 0.5% levy.

Many larger businesses proudly support apprenticeship schemes and see them as having a positive impact on society and as a valid means of dealing with youth unemployment. The moral responsibility of larger firms to provide support in this area is certainly justified, but from a business perspective budgets and expenditure will probably need to be re-structured if businesses feel that the taxation is too large a dent to cover. This is the reason why many people fear that it is the current work-force at the larger organisations that will feel the biggest impact, as it is their wages that could suffer in an effort to reduce the ‘damage’ of the levy.

At the present time the jury is out on the Apprenticeship Levy and its impacts on SMEs. It is expected that further information will be drip-fed by the government over time, and therefore business owners should make a conscious effort to research and understand the Apprenticeship Levy and the various factors surrounding its integration into the British economy.

It is also worth looking into Apprenticeship Trailblazers, a term given to groups of employers who are, from experience, reporting on standards and re-writing the book on apprenticeship schemes and how they are run in the UK.